US returned Indian entrepreneurs transforming start-up businesses

Jan 21, 2011, 02.01 AM IST

US returned Indian entrepreneurs transform start-up biz

Archana Rai, ET BUREAU

This week, a mobile application that enables free calls by Blackberry users has set the blogosphere ablaze. For TringMe, the Bangalore-based start-up that launched the app, it is the latest in a string of successful product releases.

In Hyderabad, Dimdim, a start-up that builds technology for corporate social networking, has just been acquired by global technology company SalesForce.com.

TringMe founder Yusuf Motiwala and DD Ganguly who co-founded Dimdim are part of a growing tribe of US-returned entrepreneurs who are energising the early stage start-up ecosystem in India & scoring big win with their ventures.

Entrepreneurs with overseas experience are relocating to India to build companies with cross-border models that leverage our technology skill while delivering to customers across the world.

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Top-notch Talent

Most of these big-ticket entrepreneurs relocating to India are from top-notch universities and blue chip corporates in the US. On this elite roster are Harvard Business School graduates Naveen Tewari who co-founded InMobi, a technology company for mobile advertising networks that is now the second largest network globally behind Google’s AdMob; Ashwin Damera, founder of Travel Guru, an online hotel distribution portal bought by Travelocity Global; and Krishna Mahesh, scion of the TVS Sundaram family who has launched medical devices start-up Sundaram Medicals.

In the lifesciences space, a team of MIT-trained specialists have relocated to Bangalore to set up Mitra Biotech, a company that focuses on targeted research & clinical trial for cancer treatment.

“We are a team with experience of building a research-led company in the US, but the challenge was to bring down the cost of innovation and offer indigenous solutions in a market like India,” says Mallikarjun Sundaram of Mitra Biotech Private Limited. The firm collaborates with the Mazumdar Shaw Cancer Hospital in Bangalore and the Stanley Medical Hospital.

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Lure of a Booming economy

The most important factor in the return of such skilled technologists to India is the booming Indian economy and the huge opportunities that it provides for entrepreneurship. “India is becoming a global R&D hub. Within five years, a series of Silicon Valley-class firms will emerge,” says Vivek Wadhwa, director of research, Duke University.

“India is at an interesting point where economy is growing at 9%. Banking goods can grow at three times the economy but mortgage products have reached just 4% of the economy, while it is 80% in the US,” says Adhil Shetty, who relocated to India from a job at Deloitte Consulting in the US and teamed up with cofounders with work experience in retail major Amazon.

Experts say that for many skilled workers, the decision to return is also influenced by the worsening situation with regard to visas for foreign nationals in the US. There is an estimated number of one million skilled workers and their families on temporary visas waiting for green cards. Of these, about 350-400,000 are Indians.

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Cross-border Skills

For many of the returnees, the US work experience is proving to be an advantage. “We know how difficult it is to build a technology product. A defining experience for me was seeing a system administrator trying five times to install the first version of our product. It gave rise to ‘easy’ being a key value at Dimdim,” says Ganguly. One of the benefits of building a start-up in India is the “phenomenal work culture if the team is chosen with care”, he says. On the flip side is the challenge of attracting and retaining key employees in a start-up.

“The challenge is risk aversion amongst potential team members,” says Ganguly, who agrees with industry experts who reckon India is today where Silicon valley was in early 1980 with people wanting to work at large companies as start-ups are seen as risky.

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Ecosystem Support

The pace of change in the start-up ecosystem is something that most returning entrepreneurs are buoyed about. Ashwin Damera, who founded Travel Guru in 2005, has lived through the entire lifecycle of a start-up from early inception, build-out and sale of a venture aimed at the local market.

Apart from the market opportunity, there is also the strong lure of extended family and a well developed informal support system that can help young entrepreneurs build up companies. For instance, Shetty received the first round funding from AVT Infotech, a strategic investor who was able to introduce the young start-up to potential collaborators and customers.

“While the early stage ecosystem has grown in India, I still find that there is a smaller pool of investors, investment bankers and lawyers that young start-ups can turn to compared to the US,” says Shetty. Strategic investors help fill this gap as they are more supportive and less punitive in their term sheets, compared to commercial investors, he says.

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Indian Challenge

The Indian market also throws up unique challenges that most returning entrepreneurs will have to master. “While labour cost is low, the cost of reagents and equipment that has to be imported from overseas can be a huge drain on the resources of a start-up,” says Sundaram of Mitra Biotech. To keep costs low while still leveraging a research and hospital ambience, the start-up leased space from Bangalore-based Narayana Hospitals, which ensured steady infrastructure support at moderate rental costs.

There is also the bureaucracy to deal with. “We are an IP-driven company, but whenever we have to register a patent I have to travel to Chennai and spend a week there,” says Motiwala of TringMe, who also finds the distance from the customer a huge disadvantage.

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India Advantage

But for every downside, the sheer market opportunity and the strong upside of building a company and providing solutions in a complex emerging market continues to lure entrepreneurs. “There was never any doubt that I would return the challenge is now to build a company in a huge sector like healthcare,” says Krishna Mahesh, who put in `4 crore to set up Sundaram Medical Devices in Madurai.

To begin with, the start-up will design and manufacture hospital beds. “The sheer size of the market opportunity is exciting,“ says Mahesh, whose goal is to see this fledgling business emerge as a major part in his family’s multi-billion dollar business conglomerate, the TVS Group.